How to Achieve Your Money Goals

If you’ve ever tried to set a big goal for yourself, you know how hard it can be to follow through on the best intentions: Plans for early morning runs get ruined by rain or healthy diets are sidetracked when someone brings donuts to the office.

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It turns out that the latest research from the field of goal-setting, an increasingly popular topic among economists, can help us avoid those temptations and actually achieve our goals. One secret: not having a plan at all.

That’s what Julia Belyavsky Bayuk, an assistant professor in the Department of Business Administration at the University of Delaware, found when she asked college students to save money, and told half of them to form a specific plan for how they were going to save money and to write about how they currently save money. Then, the college students were offered candy for 75 cents each. The students with a specific plan in place were more likely to splurge on the candy purchases compared with those without a specific plan in place. (Interestingly, students with savings plans who were put into an “abstract” state of mind first, through questions focused on why they save money instead of how, were more likely to resist the purchase.)

“The takeaway is that planning can limit you. It’s important to remind yourself, ‘What is my goal?’" says Bayuk, who co-authored the study, which was published in the Journal of Consumer Research.

In other words, forming a plan is not necessarily helpful, because in real life, plans often don’t work out. It rains. A child needs to stay home from school. You are offered a piece of chocolate cake. (For Bayuk, these findings also provide personal comfort: “I always wanted to be a planner. I always buy the calendars, and try to use Outlook, but it never works. I never stick to it. Now I’ve accepted this fact. I don’t form plans,” she says.)

Here are four more popular beliefs about the best way to reach goals—and what the research says really works:

Visualize your goal. “It’s very important to visualize your goal. You need to know what you’re working towards,” says Bayuk. In fact, clearly keeping the goal in mind by posting it where you see it every day could also keep your motivation at the forefront of your mind and help you think more abstractly about reaching the goal, which Bayuk’s research has shown to be helpful.

Get motivated by a purpose bigger than yourself. “If thinking of the world and others around you, makes you think more broadly, and leads you to be more open-minded, then that could help,” says Bayuk. Focusing on how your family would benefit from you staying in shape, for example, could make it easier to go to the gym.

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Be specific when describing your goal. The acronym SMART, which stands for specific, measurable, attainable, relevant, and time-limited, has been used for more than 20 years to help people set and meet goals. In general, Bayuk says, she agrees that applying the acronym can be useful, but warns people against being too specific about their plans, since her research suggests that remaining open-minded can be a better approach.

“You want to be as specific as possible if you’re sure you’ll have the opportunity to execute that specific plan,” she says. But in reality, specific plans often get sabotaged. “You might say, ‘If I wake up at 8 a.m., I’ll go to the gym.” But what if you don’t get up at 8 a.m.? If the situation doesn’t happen, that’s when having a plan is hurtful,” she explains. At the same time, having a specific plan might prevent you from taking advantage of unexpected opportunities that pop up, such as getting home from work early and using that time to go to the gym.

Dream big. Research suggests that you should dream big, but not too big, says Bayuk. When people set goals that are too small, they achieve them easily and are finished. At the same time, when people set goals that are overly ambitious, they tend to give up before reaching them. Setting goals somewhere in the middle, where they are difficult to achieve but not impossible, is probably the best approach.

Do you have any tips for how best to reach goals? What works for you?

Twitter: @alphaconsumer